Re: Re: Housing market overhang traps Spaniards in debt

#102917
peterhun
Participant

According to Rodriguez de Acuna, the over-supply in the market will take 6 years to absorb. And meanwhile house prices will likely fall even further — up to 40 percent from their peak, according to RBS.

The British bank said the slide in house prices could even accelerate given the mortgage lenders also need to offload the property portfolios they accumulated during the boom — and, unwillingly, in the crash.

Indeed, many banks have already started the process of shedding their properties, offering discounts of up to 50 percent on the original valuation.

And some warn that housing prices will not recover until the banks’ books — especially the weaker savings banks, heavily dependent on crisis funding from the European Central Bank — are cleaned up.

“The moment the ECB’s liquidity window closes, the cajas will have to sell at whatever price because they will need the money, and then we will truly see house prices fall,” said Quemada.

So the price crash has not even begun.